Progress on new Russia-China gas pipeline stalls amid Beijing’s pricing demands — Novaya Gazeta Europe
NewsEconomics

Progress on new Russia-China gas pipeline stalls amid Beijing’s pricing demands

Negotiations on the construction of a major new pipeline for the export of Russian natural gas to China have stalled due to what Moscow considers “unreasonable” price demands from Beijing, the Financial Times reported on Sunday.

If constructed, the Power of Siberia 2 pipeline would transport around 50 billion cubic metres of natural gas from the Yamalo-Nenets autonomous district in the Russian Arctic to northern China every year. It would join the existing Power of Siberia pipeline, which Russian gas giant Gazprom said in January had transported a record amount of almost 23 billion cubic metres of gas to China in 2023.

Citing three sources close to the deal, the FT said that an agreement on the proposed pipeline remains “distant” as Beijing has insisted on prices close to Russia’s own heavily subsidised domestic ones and would only commit to buying a “small fraction” of the pipeline’s planned annual capacity.

The pipeline negotiations were one of the main reasons for Vladimir Putin’s state visit to China in May, the FT said, adding that he also sought to encourage Chinese President Xi Jinping to increase Chinese bank activity in Russia and have China boycott the upcoming Summit on Peace in Ukraine in Switzerland.

Alexander Gabuev, head of Berlin’s Carnegie Russia Eurasia Centre, told the FT that Russia had “no other option” for the pipeline and would eventually have to accept China’s demands.

“China believes time’s on its side. It has room to wait to squeeze the best conditions out of the Russians and wait for attention on the China-Russia relationship to move elsewhere”, Gabuev said.

Russia has become increasingly reliant on its neighbour for economic support after European countries drastically reduced their imports of Russian gas following the full-scale invasion of Ukraine, with Gazprom’s exports to Europe having fallen to just 22 billion cubic metres in 2023 from a pre-war average of 230 billion cubic metres per year, the FT said.

pdfshareprint
Editor in chief — Kirill Martynov. Terms of use. Privacy policy.